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Tim Peter

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July 16, 2012

Why Conversion Volume Optimization Isn't Better Than CRO

July 16, 2012 | By | 5 Comments

Improve web marketing performanceI’ve been having a friendly debate with Himanshu Sharma from SEOTakeaways.com since last week when he wrote a post about “conversion volume optimization” (CVO) vs. “conversion rate optimization” (CRO).

Himanshu raises a number of excellent points in his post and I agree with his basic approach more than I disagree.

But I don’t agree completely. Conversion volume optimization isn’t better than conversion rate optimization. It’s just different. Before I tell you what’s wrong with Himanshu’s post, let’s look at what’s right.

The Benefits of Conversion Volume Optimization

Conversion volume optimization (CVO) is a valuable, albeit incomplete way to look at your traffic and your conversions. You should focus on growing your conversions along with your conversion rate. To that point, here are the benefits of conversion volume optimization:

  1. Conversion volume optimization focuses on a meaningful metric. As I’ve mentioned many times before, your metrics must be meaningful. Measuring the volume of sales, customer sign-ups or what-have-you absolutely reflects a real-world, meaningful metric.
  2. CVO downplays ratio metrics. Ratio metrics, i.e., those that show a percentage, like conversion rate often have a huge problem: They don’t tell you whether the numerator (the number of people who convert) or the denominator (the number of people who visit your site) changed when your conversion rate changes. For instance, a conversion rate that goes from 3% to 3.5% may have resulted from more sales (or whatever you’re counting as a conversion) from the same number of visitors, the same number of sales from fewer visitors, or declining sales from an even larger decline in visitors.
  3. CVO doesn’t discard conversion rate. To his credit, Himanshu doesn’t throw out any babies along with his bathwater. Instead, he outlines the flaws in conversion rate, then explains places where you should still use it. Even better, he suggests that no one number tells the whole story.
  4. CVO converts to $ (or, in Himanshu’s case, £’s). Talking about your metrics in terms of money is a Good Thing and can help you translate web metrics into terms your senior leadership cares about.

So, that’s all great, isn’t it? Keep moving along… nothing to see here, right?

Um… not exactly.

The Problems with Conversion Volume Optimization

Conversion volume optimization makes complete sense as one part of the story, but for most e-commerce sites, it’s not the whole story. Here’s a look at real-world, highly seasonal traffic data from one of my clients that helps illustrate the issue (with their approval, of course. I’ve modified some data to maintain client anonymity):

Year 1 Q1 Q2 Q3 Q4 Annual
Traffic 735,960 589,191 1,015,846 949,388 3,290,385
Total Conversions 52,253 44,103 70,522 74234 241,112
Conversion Rate 7.1% 7.5% 6.9% 7.8% 7.3%

At different times of the year, not only did traffic and sales vary wildly, but so did conversion rate. Visitors in Q3, for instance, were significantly less likely to purchase than at other times during the year but traffic was dramatically higher.

Now, let’s look at what happened the next year:

Year 2 Q1 Q2 Q3 Q4 Annual
Traffic 876,143 673,224 1,190,349 1,108,802 3,848,518
Total Conversions 62,294 53,841 89,247 95,282 300,664
Conversion Rate 7.1% 8.0% 7.5% 8.6% 7.8%

Here’s the net change in the traffic and conversion numbers year-on-year (YOY) as values:

Net Change Q1 Q2 Q3 Q4 Annual
Traffic 140,183 83,033 174,503 159,414 558,133
Total Conversions 10,041 9,738 18,725 21,048 59,552

And here’s the change in traffic, conversion and conversion rate YOY as percentages:

Net Change Q1 Q2 Q3 Q4 Annual
Traffic 19.0% 14.3% 17.2% 16.8% 17.0%
Total Conversions 19.2% 22.1% 26.6% 28.4% 24.7%
Conversion Rate 0.1% 6.8% 8.0% 9.9% 6.6%

My big problem with purely optimizing volumes is when traffic varies (both seasonally and annually) as much as it does in this (fairly representative, in my experience) example. First, note that traffic went up 17% year-on-year. Looking solely at Q1, the site in question got 10,000 more conversions, despite the fact that nothing on the site worked better than it had the year prior (most of the increase came from greater market demand YOY, plus some some additional budget for paid search).

Now, most businesses would be thrilled with the 19.2% increase in volumes seen in Q1. Any web team who set their targets at 10,000 conversions would have delivered.

And they would have left money on the table.

In the example data above, you’ll get a 17% lift in conversions for the year without doing much work beyond riding the traffic wave. But, what happens when traffic declines like many businesses saw in 2009 after the housing market collapse or as seen in the seasonal shift from Q1 to Q2? If you’re not working to convert a higher ratio of site visitors, in addition to pure volume targets, you’re going to lose share to your competition.

Looking at just conversion volumes is a little like asking the doctor to check your weight, but not your blood pressure. Sure, losing a couple of excess pounds is probably a good thing. But if your blood pressure doesn’t go down, you’re still at risk of a heart attack. No one number tells the whole story (which, to be fair, was part of Himanshu’s point, too).

In the example shown, we worked to grow both sales and traffic, but to also grow sales at a faster pace by improving site experience and calls-to-action. By increasing conversion rate, as well as the actual number of conversions, we picked up roughly 18,600 transactions that would have been left on the table if we’d only focused on growing conversion volume through more traffic.

Additionally, conversion rate optimization is often a gift that keeps on giving. Your annualized conversion rate increase typically carries over to the next year, on top of any traffic increases or additional conversion enhancements you might try.

So, I agree with Himanshu that your web team ought to have targets based on real volumes. But they also ought to have targets for traffic, conversion rate and a host of other metrics. I’d recommend you take a look at my Website Analytics Fundamentals Series for more ideas on how to set that up for your business.

I’ve also looked at a couple of additional arguments about CRO made in the original post and in the comments below in more detail here. But, today certainly covered the big issue with CVO vs. CRO. Stay tuned for more.


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Comments

  1. Hi Tim,

    Great break down of CVO. I think you can save your market share even by focusing on conversion volumes. This is because when you focus on converion volumes, your conversion rate is bound to increase. But this is not always the case with conversion rate.

    CVO is easier to carry out than CRO. Conversion rates always lie at the aggregate level and on the surface. Reporting conversion rates make sense only when you are reporting it for each and every data segment and marketing channel. But this is not the case with conversion volumes. You get what you see. CVO is better because it easy to carry out, it is not ambiguous, it communicates well with people from all walks of life, it doesn’t depend on traffic, it can’t be misinterpreted and above all it is not prone to errors.

    • Hi Himanshu,

      Thanks for reading and thanks for commenting. To me it’s not a question of “better” or “worse.” Each approach has its pros and cons and I believe that each belongs as part of your overall analytics and e-commerce strategy. I’ve outlined one of the major cons of conversion volume optimization above (and the main reason why I wouldn’t use it in isolation any more than I’d report conversion rate in isolation). I’ve posted my other points here.

      All that said, as noted above, your web team should focus on conversion volumes as well as conversion rate. Conversion volume is an excellent goal along with conversion rate and I’m glad you’re making a point of it. Keep up the great work.

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